Most USAID contractors exempt from Obama's minimum wage boost

A member of the U.S. Agency for International Development's Disaster Assistance Response Team watches as a sea vessel carrying humanitarian supplies for Haiti arrive. U.S. President Barack Obama's bid to increase the government contracting minimum wage will have little effect on U.S. aid companies and their employees. Photo by: Chris Lussie / U.S. Navy / USAID / CC BY-NC

U.S. President Barack Obama has promised to increase the minimum wage for U.S. government contractors in the coming weeks as part the go-it-alone approach to policy making he outlined in his State of the Union address on Tuesday.

READ: Obama highlights US aid priorities in SOTU

We’re still waiting to see what the actual substance of the executive order will be, but early signs indicate that Obama’s bid to boost the government contracting minimum wage to $10.10 an hour from the current minimum of $7.25 an hour will have minimal effects for U.S. aid companies and their employees.

That means the huge variety of local, international and U.S. firms and organizations who pay their employees out of U.S. Agency for International Development contracts will likely see no change to their payroll requirements as a result of this planned executive order.

Since the executive order will only apply to contracts subject to the Service Contract Act — from which development assistance contracts are exempt — the pool of U.S. aid-related professionals likely to see their wages increase is quite minimal.

USAID awards very few contracts that are subject to the SCA, according to Alan Chvotkin, executive vice president and counsel of the Professional Services Council, a trade group for government contractors.

Some contractors employed by U.S. companies to provide services at USAID’s headquarters, — the gargantuan Ronald Reagan Building in Washington D.C. — could see a wage boost, and these could include building facilities for staff or helping desk employees, but not information technology services — which are also exempt from the SCA — Chvotkin told Devex.

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About the author

  • Michael Igoe

    Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C. He covers U.S. foreign aid, global health, climate change, and development finance. Prior to joining Devex, Michael researched water management and climate change adaptation in post-Soviet Central Asia, where he also wrote for EurasiaNet. Michael earned his bachelor's degree from Bowdoin College, where he majored in Russian, and his master’s degree from the University of Montana, where he studied international conservation and development.

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